Bars find trouble staying open
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Ask any small business owner if starting their business was an easy task, and they will most certainly not agree. The difficult task requires integrity, hard work and a great deal of time, which is why many business owners end up closing their businesses for a variety of reasons.
When it comes to opening a business in Emporia, a potential business owner has many options as far as education and financial help to make it possible. Emporia Main Street, a community and economic development agency, teams up with the small business development center at Emporia State and Flint Hills Technical College to create the “start your own business” class.
“We’re finding that those businesses that are starting up and people are excited about generally received some training prior to or training throughout what they were doing, so they weren’t just jumping into an environment. They had a support system built in,” said Casey Woods, executive director of Emporia Main Street.
Emporia Main Street also offers zero interest or low-interest loans for businesses and has loaned out around $700,000 in this form, according to Woods.
Rick Becker, owner of Mulready’s, is one of those business owners who used these outlets to make his dream of owning a bar possible. While Mulready’s will be celebrating their one-year anniversary on May 16, Rick had been creating a business plan through Lisa Brumbaugh at the Kansas Small Business Development Center for at least three years. Creating the business plan this way was a completely free service. Becker also took the “start your own business” class and utilized zero interest loans.
“We sponsor quite a few things, but trying to integrate ourselves into the community as much as we can (is a goal). We felt like when we opened, we could be a cornerstone business for downtown, a business that gives back as well,” Becker said.
Becker said that the biggest struggles he’s faced so far have been staffing and learning the financial aspects, such as a liquor tax that has to be paid each month.
The financial struggles can play a role in why businesses close, especially bars, which have to pay a liquor tax that can be $4,000 a month, according to Becker.
“Undercapitalization means you don’t have enough money to run your operation, or sometimes people won’t want to perform an analysis or a cash flow analysis for their business, so they don’t know how to adjust their cash flow for the market,” Woods said. “Bars are famous for this. With bars, you’ll see several different issues. Banks in Kansas can’t take an interest in liquor, so they can’t use that as an asset to loan against. Bar equipment depreciates very quickly so it’s hard to take that as an asset to loan against.”
Another thing that can cause financial challenges for a bar is the purchase of a building for the business.
“Typically with banking rules and regulations you have to come up with 20 percent of your equity for your loan. So if you have a $200,000 loan, and for a business like a bar, that would be within the ballpark of where most of them had to be, that’s $40,000,” Woods said.
However, there are other reasons as to why small businesses close, including chronic health issues or a change in career interest.
“Being a small business owner, you work a tremendous amount of hours, and it can be a stressful piece that sometimes people will get into and decide, ‘I don’t want to do this business anymore. I want to do another business,’” Woods said.
James Roberts, former owner of Natasha’s and Bamboozler’s, decided to change career paths. He received an education degree from Emporia State and moved to Wichita to become a teacher, according to Woods.
ESU students can do their part to have a say in the businesses they want downtown. Emporia Main Street sends out surveys to students, and the results are used in Emporia Main Street’s recruitment of businesses through business investment guides.